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The cyber-gang running the CryptoLocker extortion racket is sharing a big cut of any payments they squeeze out of their victims with criminal botnet owners working closely with them, says Symantec, which has been monitoring this underworld activity online.

The CryptoLocker gang, believed to be mainly Russian-speaking, created the malware that makes use of strong encryption to lock up the victim's electronic files until the victim pays a ransom, which typically starts at least $150 to get the key to unlock their scrambled files. The gang itself is paying criminal botnet owners operating vast command-and-control systems of compromised computers to distribute CryptoLocker as a dangerous attachment in spam, says Liam O'Murchu, manager of security response operations at Symantec. In addition to spam distribution, which relies on the victim opening the malware-laden attachment to spread CryptoLocker, the gang is willing to pay a botnet owner as much as 75% of any extortion money they can get from victims if the botnet owner directly drops CryptoLocker onto a compromised machine it already controls.

Doing that basically scores a direct hit for CryptoLocker but can be counted as a loss of a compromised computer for botnet owners, hence the willingness to share such a high percentage of the monetary gain netted from any victim, O'Murchu says. "They're making a lot of money," and victims are expected to pay in Bitcoin or MoneyPak.

The Swansea, Mass., Police department even paid up a reported $750 for a pair of Bitcoins to get its files back recently. Since it encrypts files and makes them wholly inaccessible, CryptoLocker, first noticed in the September timeframe, is getting wide attention wherever it strikes. The University of Kentucky, for instance, just put out a campus alert warning it had seen victims there, and urging anyone whose computer is taken over by CryptoLocker to call the IT department immediately.

In most cases, there's not much the IT department can do except isolate the infected computer and wipe it.

One IT manager, speaking not for attribution, explained how his department handled a CryptoLocker infection on an employee's computer. "We remove the infected laptop from the network and shut down the share. The laptop is reimaged and the share file structure is copied to a device, the encrypted files are deleted from the copy, we don't risk restoring the entire contents of the copy. We restore the share from the previous evening's backup." He added: "If someone is really in need of a file from the copy, and that file was not one that was encrypted, we will restore that one file."

O'Murchu says there's no guarantee that anyone willing to pay the CryptoLocker blackmail will actually get the encryption key from the gang, and that the preferred response would be to regain files through a very reliable back-up system. A number of businesses hit by CryptoLocker recently have said reliable data back-up was the only way they restored their computer files.

O'Murchu acknowledges that CryptoLocker is quite devious, using every trick available to evade anti-malware, and that an anti-malware vendor like Symantec is faced with continuously updating detection to hold CryptoLocker at bay. Nevertheless, the actual success rate of infection from CryptoLocker may not actually been that high so far, as measured by Symantec as in the .04% success rate range. But for victims, that's not much consolation since there is no way to decrypt their locked-up files. CryptoLocker isn't known to be deleting files.

Symantec has been tracking some of the gang's activity and believes many of the same players that were involved in the well-known "fake A/V" scams of about five years ago are involved in CryptoLocker now.

The "fake A/V" scams told victims their computers were infected and they should pay to "clean" their machines, which were actually infected by "fake A/V" malware. But raising awareness about this, and a concerted effort by industry to cut off the criminals' ability to process payment cards, basically brought an end to these "Fake A/V" cons, says O'Murchu. But Symantec suspects the criminals involved in "fake A/V" then turned their attention to developing encryption-based ransomware, and in that regard upped the ante considerably.

One group of cyber-criminals, Russian-speaking, made a mistake two years ago when they targeted Russians with crypto-based extortion and were quickly arrested by Russian authorities, O'Murchu notes. The wave of CryptoLocker malware today is almost exclusively targeted at English-language speakers in the U.S., according to several anti-malware firms.

CryptoLocker is flying into e-mail boxes under the usual spam guises, ready as an attachment to be opened by an unsuspecting victim for purposes of ransomware. But the problem could actually get much worse. Today, CryptoLocker spreads in a somewhat plodding fashion through a network unwittingly assisted by gullible victims. If the gang decides to blast out CryptoLocker through scanning techniques, as happened with the well-known Blaster worm of years ago, you might find a CryptoLocker epidemic. But that may not happen because the CryptoLocker gang wants to keep firm control over its malware spread in order to harvest extortion payments from victims willing to cough up some Bitcoin and optimize the botnet-driven operation.

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